In today’s briefing:
- UK: Inflation Squeezes BoE Doves
- The Venezuela Oil Deal: A Decade-Out Supply Story Dressed as a Headline
- US Corn: September-2026
- US: Warsh Demonstrates His Hawkishness by Raising 25bp; FOMC Projects Another
- US Wheat: September-2026
- Indonesia Stabilizes: Three Stocks with Relative Upside
- Oil futures: Crude off highs, heads for solid weekly gains
- Morning Market Notes: Yesterday’s “Profit Taking” Helps Confirm Our Estimated NYMEX CL Trading Range
- Oil futures: Brent extends surge amid elevated Mideast tensions
- Oil futures: Crude eases further, partial restart eyed on Saudi pipeline
UK: Inflation Squeezes BoE Doves
- Inflation’s August rise matched final forecasts but was 0.3pp above the BoE’s view from July, with resilient services driving the upside along with energy prices.
- Airfares were surprisingly soft, perhaps skewed by sampling and imputation. Underlying price pressures more broadly are still annualising to 3% amid excessive expectations.
- Energy price rises have quadrupled since June’s temporary lows in an intensification of the hawkish shock. The dovishly biased MPC members shouldn’t block a November hike.
The Venezuela Oil Deal: A Decade-Out Supply Story Dressed as a Headline
- Washington is betting on Venezuelan oil: NABEP gives the U.S. unprecedented influence over future production, including equity, governance rights and priority access to output.
- The supply impact is distant: NABEP’s current production is far below its target, while infrastructure, capital and field development could push meaningful new volumes into the 2030s.
- Hormuz remains a different story: Venezuelan production cannot offset today’s disruption risk, leaving the current geopolitical premium largely intact despite the long-term supply option.
US Corn: September-2026
- Sentiment: Cautious Bearish, on a record managed-money long meeting a report that missed on the bearish side, with no flat-price information advantage in a settled crop.
- Treefera’s crop size agrees with the government’s, so the national number holds no edge.
- What is left to trade is which states grew the corn, and who is holding the position. Both sit outside the balance sheet the market is still trading.
US: Warsh Demonstrates His Hawkishness by Raising 25bp; FOMC Projects Another
- The FOMC unanimously (12-0) voted to raise the Fed Funds rate by 25bp to 3.75-4%, and chair Kevin Warsh emphasised his determination to achieve price stability (PCE inflation of 2%YoY).
- The median forecast by FOMC members is 4.1% unemployment for the next 3 years, and another 25bp hike in FF rates this year, enabling 2027 inflation to moderate to 2.3%.
- M2 is growing at a steady 5%YoY (following extreme volatility in Apr’20-Mar’24). Consequently, inflation is likely to moderate (barring oil shocks). No rate hikes in 2027, good for markets.
US Wheat: September-2026
- Sentiment: Cautious Bearish, conditional on Black Sea export disruption easing
- Chicago SRW wheat futures (ZW) December 2026 closed at $7.4125 per bushel on 10 September.
- The rally primarily reflects the Russia-Ukraine conflict disrupting Black Sea exports.
Indonesia Stabilizes: Three Stocks with Relative Upside
- Cautious entry: Indonesian stocks are stabilizing. We may consider a small absolute long on a 6-12-month horizon, either on the country level or with a basket of three stocks.
- Absolute for now: Historically, past downside extremes in Indonesian stocks preceded positive absolute returns 6-12-months forward, but relative performance remained weak over the same time horizon.
- Relative later: Our framework does not support an overweight to Indonesia vs. EM or Asia Pacific until relative trend signals improve. If you’re already underweight, trim it.
Oil futures: Crude off highs, heads for solid weekly gains
- Crude oil futures were drifting lower on Friday but held most of the solid weekly gains as tensions remained high across the Middle East.
- Nov26 ICE Brent futures were 2.5% lower at $104.92/b (2013 BST), while Oct26 NYMEX WTI was at $100.45/b , down 2% versus Thursday’s settle.
- This week’s huge escalation in the US-Iran conflict had lifted benchmarks by over 10% and taken the two-week gains to 20% after hostilities flared again, pushing benchmarks to four-month highs.
Morning Market Notes: Yesterday’s “Profit Taking” Helps Confirm Our Estimated NYMEX CL Trading Range
- Yesterday’s bout of NYMEX “profit taking” helps confirm our trading-range scenario, but given this market volatility, it still may be premature to confirm with conviction.
- The latest EIA weekly data for implied distillate fuel oil demand continue to reveal a possible moderating trend in U.S. manufacturing activity, thus the stats bear monitoring more than ever.
- If the economy is now finally beginning to respond more adversely to higher oil prices, hopefully the Fed rate hike will not add any fuel to the fire.
Oil futures: Brent extends surge amid elevated Mideast tensions
- Brent crude futures surged to near four-month highs on Thursday as investors eyed escalation in the Middle East, monitoring critical energy infrastructure, shipping and strategic waterways.
- Nov26 ICE Brent futures were 6.5% higher at $107.84/b (2042 BST), while Oct26 NYMEX WTI was at $102.73/b , up 7% versus Tuesday’s settle.
- Brent closed above $100/b for the first time since July in the previous session following a wave of shipping attacks as the US and Iran intensified tit-for-tat strikes, extending gains Thursday as the regional conflict expanded into Yemen once again.
Oil futures: Crude eases further, partial restart eyed on Saudi pipeline
- Crude oil futures continued to ease early Thursday on hopes that losses from the Saudi pipeline attack would not be as severe as initially feared, while there has been a midweek slowdown in military strikes.
- Nov26 ICE Brent futures were 1.4% lower at $104.37b (0155 BST), while Oct26 NYMEX WTI was at $101.24/b , down 1.15% versus Wednesday’s settle.
- Oil prices had already dropped around 3% Wednesday after Saudi Arabia stepped up efforts to restore its East-West pipeline, easing concerns over how much crude supply will remain disrupted by last week’s drone attack on a major pumping station.
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